MOBILE PAYMENTSThe Inflection Point is Now

INVESTMENT CASE

MOBILE PAYMENTS

While the mobile payment infrastructure is now in place (NFC-enabled phones and POS terminals, various platforms such as Apple Pay), we are about to enter the second phase of growth for the theme, which is mass adoption of payment solutions by consumer

Increasing marketing and improving ergonomics, security and value-added services (such as rewards, loyalty and couponing) should give a major boost to consumer engagement

Mass adoption is not a question of if, but when:

the example of e-commerce says it all: despite initial concerns around security, now most consumers make online transactions

new forms of mobile payments will expand the total addressable market: in-car payments and VR shopping

Government incentives for a cashless society are another major catalyst: increasing number of limits on cash transactions all around the world

The best way to capture this secular growth in the volume of digital payments is to get exposure to payment processors, which handle all these transactions

THE MOBILE
AT THE HEART OF DIGITAL INTERACTIONS

Mobile payments refer to all payment transactions made from or via a mobile device and debited either on a bank account or on a mobile operator bill

TOP 5: SMARTPHONES PENETRATION

Source: geoba.se/usnews.com/emarketer

The rise of smartphones, tablets, and now wearables has driven new means of paying

SMARTPHONES ARE USED TO PAY,
BUT ALSO TO GET PAID
(MERCHANTS)

All smartphones now allow contactless payments in a simple and quick way via an electronic mobile wallet, and can also become POS terminals for merchants

THE FUTURE OF MOBILE PAYMENTS
IS ALREADY TAKING SHAPE

In-car payment solutions will allow drivers to pay for gas, toll fees or public parkingwithout having to pull their credit card or smartphone from their pocket

Payments in virtual stores are another exciting opportunity:

consumers wearing a VR headset will soon have

the ability to visit virtual stores and make purchases

Alibaba recently unveiled a VR mall called Buy+ in which consumers gaze at products long enough to select them and nod their heads to buy them

Amazon is said to be working on a similar initiative

The seamless checkout experience (pioneered by Amazon Go) will deal a final blow to cash payments. In an Amazon Go store, you just walk in, pick the groceries you need and walk out without having to go through a checkout line. Your Amazon account is automatically debited when you exit the store. This revolutionary checkout experience is likely to be adopted by other major retailers in the future

WHAT IS HAPPENING NOW?

THE USER EXPERIENCE

IS THE KEY IN MOBILE PAYMENTS ADOPTION

The biggest challenge remains the change in consumer habits. It has to be simple, intuitive and comprehensive

Mobile payment requires better communication and education

Mobile payments allow the merchant to increase the visibility on its brand, target consumers and increase loyalty services (e.g. coupons)

As illustrated by the recent success of Samsung Pay’s loyalty program, rewards/couponing are expected to be a major catalyst for mobile payments adoption

SECURITY CONCERNS
NEED TO BE IRONED OUT

With tokenization technologies and the emergence of biometrics, mobile payments become more secure than contactless card payments

GOVERNMENTS AROUND THE WORLD
PUSH TOWARDS A CASHLESS SOCIETY

To fight money laundering and tax evasion in 2014, Israel limits cash transaction between businesses to 5,000 shekels (USD 1,400) and private transactions done in cash or by check to 15,000 shekels

In most EU countries cash payments are limited:

In 2015, France has limited the use of cash payments to EUR 1,000 from EUR 3,000

In 2016, Italy has limited the use of cash payments to EUR 2,999

Germany plans to impose a limit of EUR 5,000 on cash payments

India demonetized some of its banknotes at the end of 2016

The European Union plans to launch a service by the end of 2018 that allows mobile payments person-to-person using the mobile phone number as a proxy for the IBAN

WHICH PAYMENT WOULD YOU CHOOSE?

PERSPECTIVES

STRONG GROWTH OUTLOOK

The annual transaction volume via mobile payments in 2015 was $450bn and is expected to exceed $1tn in 2019

Asia Pacific and Africa are early and faster adopters of mobile payments with more than 100 million mobile payments users

AFRICA AND CHINA ARE THE PIONEERS OF MOBILE PAYMENTS

Mobile Payments are a solution for providing financial services to unbanked people:

In Sub Saharan Africa, the mobile penetration in Africa is 70% but only 10% of the population have a bank account

Payments via mobile are the faster and cheaper way to send money to family. The SMS and USSD technology is compatible with 99% of mobiles

In China, under the impulse of e-commerce and due to the low use of bank cards online payment, and especially mobile-commerce, has become a reality

Annual transaction volume in $Bn
Mobile Payments

Source: AtonRâ Partners, TrendForce, NFC

Mobile payment users by region
(in millions)

Source: AtonRâ Partners, Gartner Inc.

PLAYERS

THE PAYMENT INDUSTRY:
A PRIVATE CLUB?

New players enter the payment industry, already benefiting from a large customer base and offering many online services: Internet and Tech giants such as Google, Apple, PayPal and Amazon are providing new mobile payments solutions

The legacy players (telecoms, banks, card networks…) must assert themselves. The need for innovation is the opportunity to boost these institutions and offer them a new position in the payment industry